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Heathrow losses nearly halved to £684m as Britain’s busiest airport promises ‘year of renewal’ in 2023
- Heathrow Airport continues to recover from the lows of Covid-19
- Passenger numbers tripled to 62 million last year when restrictions were eased
Heathrow Airport losses fell to £684 million last year as the British Airways hub continues to recover from pandemic lows.
Britain’s busiest airport, which suffered a loss of around £1.3bn in 2021 amid strict Covid-19 travel restrictions, grew faster than any airport in the world in 2022 as passenger numbers tripled to 62 million.
Heathrow, also hampered by rising costs, staff shortages and union action, said 2022 was “a year of recovery” on Thursday and promised this year would be a “year of renewal” as revenues continue to recover.
Heathrow promised that this year would be a ‘year of renewal’ as revenue continues to recover
Revenues rose 140 per cent to £2.9 billion in 2022, while passenger volume rose 217.6 per cent from 19.4 million a year earlier.
Heathrow’s consolidated nominal net debt increased by 9.2 per cent to approximately EUR 14.6 billion.
The airport said its funding remains “conservative, with strong liquidity and gearing below pre-pandemic levels.”
Heathrow also signaled a return to normality in its workforce after the pandemic, but warned that “border closures and loss of skills have deeply scarred the global aviation sector and it will take some time to fully recover”.
It added: “More than 25,000 people have started work at Heathrow in the last 18 months and the level of resources is now close to pre-pandemic levels.
“The focus is now on improving skills, experience and building resilience. We see the benefits of a successful outing during Christmas and the holidays. In 2019, passengers ranked Heathrow as one of the top 10 in the world and we are determined to get back there.”
CEO John Holland-Kaye, who is stepping down this year, said: ‘2022 may have been a year of recovery, but 2023 will be a year of renewal for Heathrow.
“Our teams have already delivered a successful Christmas and pre-holiday vacation, and with a great investment plan, we are determined to once again be in the top 10 airports for service.”
Looking ahead, Heathrow stuck to its December 2023 forecast, which predicted adjusted EBITDA growth of 4.1 per cent to £1.74 billion on the back of further passenger growth and revenue of £3.2 billion.
However, operating costs are expected to rise by 18.3 per cent to £1.4 billion “supporting increased passenger numbers, the full year effect of reopened terminal facilities and higher utility costs”.
A key factor for Heathrow this year and beyond is the Civil Aviation Authority’s decision on investment in passenger services, which is expected to take place in March.
Heathrow denounced the CAA’s regulated tariffs, labeling tariff plans for the next three years as ‘unfeasible due to errors in the CAA’s forecasts’.
The CAA controls Heathrow’s maximum airport charges and has introduced an interim rate until it finalizes its longer-term plans.
Head of Investment at Interactive Investor Victoria Scholar said: “The lifting of covid restrictions last year has helped Heathrow recover from the extremely difficult pandemic era that saw most flights ground to a halt.
However, 2022 brought its own challenges with labor shortages leading to the introduction of passenger capacity limits between July and October.
Strikes, problems with baggage handling and cancellations, the lockdowns in China and the long-term structural decline in business travel have created headwinds for Heathrow.
‘Moreover, there is the macroeconomic background that has led to slower growth, a declining consumer and high costs. Nevertheless, Heathrow said service has returned to pre-pandemic levels after a successful Christmas and summer break, describing 2023 as the “year of renewal”.’